Changing an Employee’s Contract

An employer can sometimes change an employee’s contractual terms, but wanting or needing a change does not automatically give the business the right to impose it.

The safest route will depend on the existing contract, what the business needs to achieve, whether the proposed change is genuinely contractual, whether there is a relevant flexibility clause and, critically, whether agreement can be reached.

In most cases, the starting point should not be “How do we make employees accept this?” It should be “What outcome does the business need, and what is the quickest defensible way of getting there?”

What counts as a contractual term?

An employment contract is wider than the document headed “Contract of Employment”.

Contractual terms may come from:

• written contracts and offer letters;
• terms agreed verbally;
• collective agreements;
• policies or handbooks that have been incorporated into the contract;
• implied terms; and
• established arrangements that have become contractual through custom and practice.

A company policy is therefore not automatically contractual or non-contractual. Its wording, how it was introduced, whether it is incorporated into the contract and how the business has treated it in practice may all matter.

Similarly, a benefit or working arrangement that is not mentioned in the written contract should not automatically be assumed to be discretionary. A sufficiently clear and established practice can sometimes become part of the contractual relationship.

Step 1 — Identify the change you need

Start with the business outcome rather than the contractual mechanism.

Perhaps the business needs longer opening hours, lower operating costs, greater flexibility between sites, different responsibilities, new shift patterns or a restructure.

Ask:

• What problem are we actually trying to solve?
• Is a contractual change necessary?
• Could the same result be achieved another way?
• Is the change intended to be permanent or temporary?
• Who genuinely needs to be affected?

This matters commercially as well as legally. A business can spend weeks trying to force through a contractual variation when a smaller operational change would have achieved substantially the same result with less disruption and risk.

Step 2 — Check the existing contract

Do not announce a proposed change until you understand the existing contractual position.

Review the individual contract, offer documentation, relevant policies, collective agreements and any established working practices.

In particular, establish:

• the existing contractual obligation;
• whether the term you want to alter is genuinely contractual;
• whether a flexibility or variation clause applies;
• whether the proposed change falls within that clause;
• whether past practice has altered the apparent written position; and
• whether a recognised trade union or collective agreement is involved.

If the documentation is unclear or inconsistent, consider reviewing your employment contracts and policies before committing to a process.

It is also worth considering what should an employment contract contain where the existing documentation appears incomplete or outdated.

The actual wording matters. A general clause saying the employer may make changes does not automatically provide an unlimited power to rewrite significant terms.

Step 3 — Build the business rationale

Employees are more likely to understand a proposed change if the employer can explain clearly why it is needed.

The rationale should identify the genuine commercial or operational problem and explain how the proposal addresses it.

Depending on the circumstances, that might include changing customer requirements, financial pressures, new technology, operational inefficiency, changes in demand or the need to restructure the business.

Avoid manufacturing a justification after the decision has already been taken. The rationale should be real, evidence-based where appropriate and capable of being explained consistently.

A strong commercial reason does not create automatic legal permission to change a contract. It does, however, help the employer assess its options, conduct meaningful consultation and demonstrate why the proposal is being made.

Step 4 — Consult affected employees

Consultation should be genuine rather than an announcement dressed up as a meeting.

Explain:

• what change is proposed;
• why the business believes it is needed;
• when it may take effect;
• how affected employees may be impacted;
• what alternatives have already been considered; and
• what the proposed contractual wording would look like.

Employees should then have a meaningful opportunity to ask questions, explain concerns and suggest alternatives.

Listen to those proposals and decide whether they change the business’s preferred approach. Consultation does not mean management must abandon a commercially necessary proposal simply because an employee objects. It does mean the employer should remain open to reasonable alternatives and modifications before reaching a final decision.

There is no magic number of consultation meetings that makes a contract variation fair. A straightforward agreed change may require very little discussion. A significant reduction in pay or fundamental change to working arrangements may require considerably more.

Where terms have been negotiated through a recognised trade union, collective bargaining arrangements must also be checked and followed.

Step 5 — Seek agreement

Agreement is normally the cleanest route to a contractual variation.

If employees understand the commercial reason for the proposal and their practical concerns have been addressed, agreement may be achievable without escalation.

Possible ways of making a difficult proposal more acceptable could include:

• phasing the change;
• making it temporary or subject to review;
• adjusting another term;
• offering compensation for the loss of a contractual benefit;
• providing longer notice;
• modifying the proposal for employees with particular difficulties; or
• finding another way to achieve part of the desired outcome.

An employee does not necessarily have to sign an entirely new employment contract for an agreed variation to become effective.

However, the agreed change should be recorded clearly. Where it changes particulars that must appear in the employee’s statutory written statement, written confirmation must be provided within one month of the change.

What if an employee refuses the change?

An employee can refuse a proposed contractual variation.

That does not necessarily mean the process has reached the end.

First establish why the employee objects. Their concern may reveal a practical issue that can be resolved without abandoning the business objective.

Consider whether:

• the proposal can be amended;
• additional notice would help;
• the change can be phased;
• a temporary arrangement would work;
• an alternative term could compensate for the disadvantage; or
• the business outcome can be achieved in another way.

Do not assume that silence automatically means agreement.

In some circumstances, an employee who continues working under changed terms without objecting may eventually be treated as having accepted the variation through their conduct. But that is fact-sensitive and is a poor basis on which to design a contract-change process.

An employee may instead continue working while expressly objecting to the change — often described as working under protest. This can allow them to challenge the variation while remaining employed.

Can an employer impose a change?

Sometimes an employer considers imposing a contractual change despite not having obtained agreement.

This is a high-risk route.

If the change is not authorised by the existing contract, imposing it can amount to a breach of contract. The consequences will depend on what has changed and how serious the breach is.

Potential risks include:

• breach-of-contract claims;
• unlawful deduction from wages claims where pay is reduced;
• discrimination claims;
• employees working under protest;
• grievances or industrial relations problems; and
• resignation followed by a constructive-dismissal claim where the breach is sufficiently serious.

The fact that the employer considers the change commercially necessary does not remove these risks.

Before imposing a variation, the employer should therefore understand both the legal exposure and what it would do if employees continue to reject the new term.

Can a flexibility clause be used?

A well-drafted flexibility or variation clause can give an employer greater scope to change specified terms without obtaining fresh agreement each time.

But it is not a blank cheque.

The wording of the clause, the nature of the change, the surrounding circumstances and the way the employer proposes to exercise the power all matter.

Employers should normally consult before relying on a flexibility clause and provide reasonable notice.

For example, a mobility clause may provide some ability to change an employee’s work location. That does not mean it will necessarily be reasonable to require a move to a substantially more distant workplace at very short notice.

The employer should consider practical consequences such as commuting distance, transport, caring responsibilities, disability and additional cost.

A major detrimental change should not be forced into an apparently broad clause simply because its wording looks convenient.

Changing pay, hours, duties or location

The level of risk often depends on the term being changed.

Pay

Reducing contractual pay without agreement can expose the employer to breach-of-contract and unlawful-deduction claims.

A genuine financial need to reduce costs does not itself allow the employer simply to reduce salaries after giving notice.

Working hours

Changes to hours or shift patterns may sometimes fall within a properly drafted flexibility clause, but the clause and proposed use still need to be assessed carefully.

Consider the impact on caring responsibilities, disability, existing flexible-working arrangements and other individual circumstances.

Duties

Most roles naturally evolve to some extent.

A modest change to duties may fall within the employee’s existing role or contractual flexibility. A fundamental change in responsibilities, status or the nature of the job may be different and could require agreement or form part of a wider restructuring exercise.

Where roles themselves may disappear or change materially, consider whether redundancy and restructuring support is the more appropriate route rather than treating the issue solely as a contract variation.

Place of work

Check any mobility clause carefully and consider whether using it in the proposed circumstances would be reasonable.

The existence of a mobility clause should not be treated as permission to disregard the practical impact of relocation on the employee.

Dismissal and re-engagement

Where agreement cannot be reached, an employer may eventually consider ending the existing contract and offering continued employment on new terms.

This is formally known as dismissal and re-engagement and is sometimes called “fire and rehire”.

As at 9 September 2026, it remains legally possible in appropriate circumstances, but it should be treated as a last resort rather than the automatic next step after an employee refuses a proposed change.

The statutory Code of Practice on dismissal and re-engagement applies where the employer is considering contract changes and envisages that dismissal and re-engagement may be used if agreement cannot be reached.

The employer should have made genuine and extensive attempts to reach agreement, considered reasonable alternatives and avoided threatening dismissal prematurely.

The Code also recommends contacting Acas before raising the prospect of dismissal and re-engagement with employees or their representatives.

Ending the original contract is a dismissal even if the employee accepts re-engagement immediately on the new terms.

The employer must therefore consider:

• the reason for dismissal;
• whether that reason is potentially fair;
• whether dismissal is reasonable in the circumstances;
• the procedure followed;
• contractual and statutory notice;
• the terms of the re-engagement offer; and
• an appropriate right of appeal.

Where the proposed change actually arises from a redundancy situation, the correct analysis may instead be redundancy. The statutory dismissal and re-engagement Code does not apply to redundancy dismissals.

Employers considering this route should take specific dismissal advice for employers before notices are issued.

Employment Rights Act 2025 — change from January 2027

The law in this area is changing materially.

From 1 January 2027, the Employment Rights Act 2025 will introduce substantially stronger protection against dismissal connected with certain contractual variations and fire-and-rehire practices.

The ordinary qualifying period for unfair-dismissal protection will also reduce from two years to six months, and the existing compensatory-award cap will be removed.

Those changes are enacted but are not yet the law in force at the date this guide was reviewed.

Any dismissal-and-re-engagement exercise taking place on or around January 2027 will therefore require a fresh assessment of the law applying at the relevant time.

Large-scale contract changes

Additional legal obligations can arise where an employer proposes dismissals as part of a large contract-change exercise.

At the date of this guide, collective consultation is generally triggered where an employer proposes to dismiss and re-engage 20 or more employees at one establishment within a period of 90 days or less.

Where triggered, consultation with appropriate representatives must start in good time and at least:

• 30 days before the first proposed dismissal where 20 to 99 dismissals are proposed; or
• 45 days before the first proposed dismissal where 100 or more are proposed.

Failure to comply can result in a protective award. Since 6 April 2026, the maximum protective award is up to 180 days’ pay for each affected employee.

Where the statutory dismissal and re-engagement Code is also relevant, an unreasonable failure to follow it can potentially affect tribunal compensation, including an uplift of up to 25% in relevant cases.

The Employment Rights Act 2025 contains further changes to collective-redundancy thresholds for 2027. Those wider rules are not yet in force and should not be applied prematurely.

Contract changes after TUPE

TUPE creates additional restrictions on contractual variation.

Where the sole or principal reason for changing terms is the transfer itself, an employer cannot assume that obtaining the employee’s agreement makes the variation safe.

Limited routes may exist, including where changes improve the employee’s terms, where there is a valid economic, technical or organisational reason involving a change in the workforce and the employee agrees, or where the existing contract permits the change.

Trying simply to harmonise transferred employees onto less favourable terms because it would be administratively easier can be particularly problematic.

There is no general point at which TUPE protection against transfer-related contract changes simply expires because enough time has passed.

If a business transfer or service provision change is involved, establish when TUPE applies before planning the contractual variation.

Equality and discrimination risks

A contract change can appear neutral while having a materially different impact on particular employees.

For example, a change to hours, shifts or location could create particular difficulties because of disability, pregnancy, family responsibilities or another protected characteristic.

An employer should therefore consider equality impact during the consultation process rather than waiting for an objection after the decision has been made.

Reasonable adjustments may also be required for a disabled employee.

Remember to include employees who are absent from work, including those on sickness or family-related leave, in relevant consultation and communications.

The fact that the same change is proposed for everyone does not automatically mean there is no discrimination risk.

Recording the agreed change

Once a change has been agreed, close the process properly.

The written confirmation should make clear:

• what term is changing;
• the old and new position where helpful;
• when the change takes effect;
• whether it is permanent or temporary;
• any transitional arrangements;
• any other terms agreed as part of the variation; and
• whether all other contractual terms remain unchanged.

Keep records of the business rationale, the documents reviewed, consultation discussions, alternatives considered, employee responses and the final outcome.

Where the variation affects particulars that form part of the statutory written statement of employment particulars, the employee must receive written confirmation within one month.

Good records are not merely defensive. They reduce future disagreement about exactly what was agreed.

Common contract-change mistakes

Common problems include:

• deciding on the contractual mechanism before defining the business outcome;
• assuming the written contract contains every relevant term;
• treating policies as automatically non-contractual;
• treating a flexibility clause as unlimited;
• announcing a decision instead of consulting;
• giving employees too little information about why the change is needed;
• assuming silence equals consent;
• implementing the change before the position is clear;
• overlooking discrimination or reasonable-adjustment issues;
• ignoring collective bargaining arrangements;
• overlooking TUPE;
• threatening dismissal too early;
• confusing a potential redundancy situation with a simple variation exercise; and
• failing to document the final agreement.

The objective is not to remove every possible risk. It is to understand the contractual position, identify the business outcome and select the quickest defensible route to achieve it.

Frequently asked questions

Does an employee have to sign a new contract for a change to be valid?

Not necessarily.

A contractual variation can be agreed without an entirely new signed contract. Agreement may arise in different ways depending on the circumstances.

However, employers should record agreed variations clearly in writing. Changes to particulars covered by the statutory written statement must be confirmed in writing within one month.

Can an employee simply refuse a contract change?

Yes. An employee can reject a proposed variation.

The employer must then decide whether it can reach agreement through further consultation, modify the proposal, achieve the business objective another way or consider one of the higher-risk alternatives.

Refusal does not itself give the employer an automatic right to dismiss the employee.

Can silence amount to acceptance?

Potentially, but not automatically.

An employee’s conduct — including continuing to work under changed terms without objecting — can sometimes become relevant when deciding whether a variation has been accepted.

An employer should not rely on silence as its primary method of obtaining agreement, particularly where the change is significant or detrimental.

How long should consultation over contract changes last?

There is no universal number of days or meetings for an ordinary individual contract-change consultation.

The process should be long enough to allow employees to understand the proposal, raise concerns, suggest alternatives and have those points genuinely considered.

Separate statutory time periods can apply where collective consultation is triggered.

Can we change the contracts of only some employees?

Potentially.

There may be legitimate operational reasons why a proposal affects one group and not another. The employer should be able to explain the distinction and consider whether the selection creates discrimination, consistency or employee-relations risks.

Does short service make changing an employee’s contract safer?

It can affect some unfair-dismissal risk, but it does not remove contractual or statutory rights.

At 9 September 2026, ordinary unfair-dismissal protection normally requires two years’ service. Employees may still have rights relating to breach of contract, wages, discrimination and automatically unfair dismissal regardless of ordinary qualifying service.

The qualifying period for ordinary unfair dismissal reduces to six months from 1 January 2027.

For more practical employer guidance on workplace issues and employment law, see our HR & Employment Law resources.